Bringing corporate culture to the bottom line

Comparing survey and performance data from 34 large corporations to show that those that have participative cultures experience better performance than those that do not, and this difference in performance appears to have widened over the five years that these firms were studied.

Abstract

Up to now managers could find little evidence to support the idea that the organization's culture has an impact on its bottom-line performance. To remedy this, Denison draws on survey and performance data from 34 large corporations to show that those that have participative cultures experience better performance than those that do not. This difference in performance appears to have widened over the five years that these firms were studied. The results also hold up when the performance measures for each firm (return on investment and return on sales) are compared with those of their competitors. Denison suggests that this comparative approach to the study of organizational culture provides a way to capture the impact that culture has on organizational performance. This strategy, he argues, also provides a way of diagnosing organizations and measuring the ways in which human resources management, organizational culture, and management practices do, in fact, contribute to the success of business organizations.